The Best Laid Energy Plans ......Hello Maine, How Are Your Energy Prices Doing ?

The Best-Laid Energy Plans

The feds bet $737 million on a salt tower for solar power. You’ll never guess the result.

Government planning and subsidies will make America the world’s green-energy superpower, create millions of jobs, and supercharge the economy—or so we’re told.

The reality is closer to Crescent Dunes, a Nevada solar-energy plant that has gone bust after receiving a $737 million federal loan guarantee.

An inconvenient truth is that the sun sets each day, but the Obama Administration’s green planners had an app for that. They decided to invest in the Crescent Dunes facility that would use molten salt to store heat from the sun, produce steam, and generate electricity even at night. The utility NV Energy had already agreed to buy the electricity. Government support would carry the project to sunny success.

In September 2011, the Energy Department described how the 110-megawatt facility would “be the first of its kind in the United States and the tallest molten salt tower in the world,” powering more than 43,000 homes a year. The precedent was Solar Two, a small pilot plant 

decommissioned in 1999 that had shown it was technically feasible to use molten salt to store and generate power. But in a 2006 report the Energy Department said the 10-megawatt facility “was never expected to be a viable commercial-scale plant and, in fact, did not validate economic feasibility.”

No worries. It’s only taxpayer money, and the feds jumped into Crescent Dunes anyway. The Department of Energy finalized its loan guarantee on Sept. 23, 2011, a week before the federal loan program expired. A month earlier Nevada had approved $119.3 million in tax abatements for Crescent Dunes over 20 years. The plant also received some $140 million in private investment.

Crescent Dunes began by missing the deadline established by its agreement with NV Energy, becoming operational months late. Commercial operations began in November 2015, but less than a year later the facility went offline because of a “massive leak in the hot salt tank,” according to SolarReserve, a partial owner of Crescent Dunes.

Through the first half of 2017 the plant generated no electricity and no sales, according to its disclosures to the Federal Energy Regulatory Commission. Yet in April 2017 the Department of Energy proclaimed Crescent Dunes a “success story” taken from “mirage to reality,” “a milestone for the country’s energy future,” and a global “blueprint for solar projects.”

In a fact sheet advertised as “up-to-date as of June 2017,” the Energy Department claimed Crescent Dunes was “operational” and projected energy generation of up to 482,000 megawatt hours a year. The plant never generated that much power in the entirety of its operations. An Energy Department spokesman declined comment.

Crescent Dunes resumed operations in the latter half of 2017, but problems persisted. In a June 2019 report to the Public Utilities Commission of Nevada, NV Energy described how the plant “has experienced frequent and prolonged outages.” Crescent Dunes’ performance problems were so severe that they posed “the most significant risk” for NV Energy’s ability to meet its renewable portfolio standard obligations, the utility said.

Last summer Crescent Dunes’ hot salt tanks “suffered a catastrophic failure, which caused ground contamination and required the removal of the solar tower that is essential to the plant’s ability to generate any electrical power to function as designed,” SolarReserve said in recent court filings.

Operations halted again. The Department of Energy sent a formal default notice in September. Weeks later Crescent Dunes’ sole customer, NV Energy, terminated its power purchase agreement. The plant has no prospective clients and couldn’t supply energy even if it found a buyer. Even if the plant began running again, it would face competition from solar photovoltaic projects. Crescent Dunes’ average price was more than $132 per megawatt hour, but Techren Solar II in Nevada’s Eldorado Valley offered the same unit of power for $31.15 in the fourth quarter of 2019.

SolarReserve, which did not respond to requests for comment, is now suing for the equitable dissolution of Tonopah Solar Energy LLC, the entity created to run Crescent Dunes. In November SolarReserve told a federal court that “the plant is moribund—neither generating energy nor revenue” and that Tonopah is “insolvent,” has debt of more than $440 million with “assets of much less value,” and is “unable to pay its debts as they come due.”

Scores of new businesses fail, but private investors lose their own money. Government investments turn on politics more than feasibility.

Hand the energy economy over to the government in the name of climate change, and there will be countless more Crescent Dunes fiascoes.

Jan. 16, 2020 7:03 pm ET

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Comment by Willem Post on January 21, 2020 at 8:24am

Indirect subsidies are due to loan interest deduction and depreciation deductions from taxable incomes.

Direct subsidies are due to up front grants, waiving of state sales taxes, and/or local property (municipal and school) taxes. See URL.

 

An owner of ridgeline wind would have to sell his output at 18.8 c/kWh, if the owner were not getting the benefits of cost shifting and upfront cash grants and subsidies.

That owner could sell his output at 16.4 c/kWh, if his costs were reduced due to cost shifting.

He could sell his output at 9 c/kWh, if on top of the cost shifting, he also received various subsidies. The same rationale holds for solar. See table.

 

In NE construction costs of ridgeline wind and offshore wind are high/MW, and the capacity factor of wind is about 0.285 and of solar about 0.14. Thus, NE wind and solar have high prices/MWh. See table.

 

In US areas, such as the Great Plains, Texas Panhandle and Southwest, with much lower construction costs/MW and much better sun and wind conditions than New England, wind and solar electricity prices/MWh are less.

 

Those lower prices often are mentioned, without mentioning other factors, by the pro-RE media and financial consultants, such as Bloomberg, etc., which surely deceives the lay public

 

Future electricity cost/MWh, due to the planned build-out of NE offshore wind added to the planned build-out of NE onshore wind, likely would not significantly change, because of the high costs of grid extensions and upgrades to connect the wind plants and to provide significantly increased connections to the New York and Canadian grids.

 

NOTE: For the past 20 years, Germany and Denmark have been increasing their connections to nearby grids, because of their increased wind and solar.

 

The subsidy percentages in below table are from a cost analysis of NE wind and solar in this article. See URL.

http://www.windtaskforce.org/profiles/blogs/excessive-subsidies-for...

 

Values for 2018 are represented in below table.

 

NE Wind/Solar

NE Wind

%

NE Solar

%

Ridgeline

Large-scale

c/kWh

c/kWh

Price to utility

No direct/indirect subsidies

No cost shifting

18.8

100

23.5

100

Less cost shifting

2.4

13

2.1

9

Price to utility

No direct/indirect subsidies

With cost shifting

16.4

87

21.4

91

Less subsidy, wind

45% of 16.4

7.4

39

Less subsidy, solar

45% of 21.4

9.6

41

Price to utility*

With direct/indirect subsidies

With cost shifting

9.0

48

11.8

50

 

* Owner prices to utilities are based on recent 20-year electricity supply contracts awarded by competitive bidding in New England. These prices would have been about 48% to 50% higher without the direct and indirect subsidies and the cost shifting. Similar percentages apply in areas with better wind and solar conditions, and lower construction costs/MW, than New England. The prices, c/MWh, in those areas are lower than New England.

Comment by Willem Post on January 21, 2020 at 8:22am

States With and Without Mandated Renewable Portfolio Standards

 

Here is an item of interest to many people regarding mandated RPS requirements, which require utilities to sell a certain percentage of their total electricity sales as renewables, such as wind, solar, wood burning, municipal waste burning, etc. Some states also count hydro as renewable.

 

States with mandated RPS requirements had electricity prices 26% higher than those without.

https://wattsupwiththat.com/2019/05/02/researchers-say-renewable-en...;

 

The 29 states with mandated RPS requirements (plus the District of Columbia) had average retail electricity prices of 11.93 c/kWh, according to the U.S. Energy Information Administration. 

 

The 21 states without mandated RPS requirements had average retail electricity prices of only 9.38 cents/kWh.

https://www.eia.gov/electricity/state/

 

The logical conclusion is, the more RE, the higher the electric rates, regardless of energy mix on the grid.

 

3) Comparison of California, US and Vermont Electricity Prices, All Sectors

 

It is important to understand no cost ever disappears. The key issue is allocation (a.k.a., follow the money), which often implies politics, and realizing state and federal energy policy objectives.

 

Only a part of the costs of RE projects is added to the utility rate base. The other parts are paid for by: a) increasing taxes, fees and surcharges, and/or 2) increasing prices of goods and services, and/or c) adding to federal and state debts. Thus any increase in rates reveals only a part of the cost picture.

 

The weighted average US prices includes high California prices and quantities, a major component of the weighted average. Table 1 shows the weighted average US price including California. See URLs

 

http://www.neo.ne.gov/statshtml/204/204_2017.htm

https://www.eia.gov/electricity/state/California/

 

If California were removed, it would lower the US average. A comparison of California versus that lower US average shows California rates, all sectors, increased 28.36% and US rates (wo/California) only 5.45% during the 2010 - 2018 period.

 

California’s irrational/over-the-top/expensive RE efforts are demonstrating, the more highly subsidized RE, the higher the electric rates. But that is only a part of the cost picture, because not all costs end up in the rate schedules, as shown in section 1.

 

Vermont: The Vermont rates, all sectors, as posted by EIA, do not include the Efficiency Vermont surcharge and the Electric Assistance Program fee tacked onto electric bills by politicians to finance pseudo-social programs.

 

The EV surcharge has been increasing from about 6% in 2010 to about 8.0% in 2018 for most households.

 

If EV and EAP charges were added, Vermont rates increased 16.34% and US rates (w/tiny Vermont) only 7.63% during the 2010 - 2018 period. See table.

http://www.windtaskforce.org/profiles/blogs/efficiency-vermont

 

Year/All sectors

CA

US, w/CA

US wo/CA

VT wo/EV + EAP

VT w/EV + EAP

c/kWh

c/kWh

c/kWh

c/kWh

c/kWh

2010

13.01

9.83

9.58

13.24

14.03

2011

13.05

9.9

9.66

13.8

14.67

2012

13.53

9.84

9.55

14.22

15.14

2013

14.30

10.07

9.74

14.61

15.62

2014

15.15

10.44

10.07

14.57

15.62

2015

15.42

10.41

10.02

14.41

15.46

2016

15.23

10.27

9.89

14.46

15.57

2017

16.06

10.48

10.05

14.6

15.77

2018

16.70

10.58

10.11

15.09

16.33

Increase, %

28.36

7.63

5.45

13.97

16.34

 

Household Electric Bill With and Without Efficiency Vermont Surcharge: The GMP energy $/kWh for “households” is significantly greater than for “all sectors”. Here are the data from my recent bills.

 

1

Billing period

 

19-Apr

19-Mar

19-Feb

.

20-Dec

.

20-Oct

20-Sep

2

Usage, kWh

 

513

740

885

869

545

496

3

Total bill w/EEC, $

 

102.29

139.38

164.39

162.58

108.12

99.30

4

Unit cost, $/kWh

(3/2)

0.1994

0.1884

0.1858

0.1871

0.1984

0.2002

5

GMP energy, $/kWh

 

0.1645

0.1645

0.1645

 

0.1645

 

0.1567

0.1567

6

EE surcharge, $

 

7.03

10.15

12.13

12.28

7.70

7.01

7

Total bill wo/EEC, $

(3-6)

95.26

129.23

152.26

150.3

100.42

92.29

8

Bill increase due to EEC, %

(3/7)

7.38

7.85

7.97

8.17

7.67

7.60

Comment by Willem Post on January 21, 2020 at 8:22am

Wind and Solar Subsidies Provide a Bonanza for Wall Street

 

This URL shows wind and solar prices per kWh would be at least 50% higher without direct and indirect subsidies. They would be even higher, if the costs of other items were properly allocated to the owners of wind and solar projects, instead of shifted elsewhere. See below section High Levels of Wind and Solar Require Energy Storage.

 

http://www.windtaskforce.org/profiles/blogs/economics-of-tesla-powe...

http://www.windtaskforce.org/profiles/blogs/large-scale-solar-plant...

http://www.usu.edu/ipe/wp-content/uploads/2016/04/UnseenWindFull.pdf

 

This URL shows about 2/3 of the financial value of a wind project is due to direct and indirect subsidies, and the other 1/3 is due to electricity sales.

http://johnrsweet.com/Personal/Wind/PDF/Schleede-BigMoney-20050414.pdf

 

- Indirect subsidies are due to federal and state tax rebates due to loan interest deductions from taxable income, and federal and state MARCS depreciation deductions from taxable income.

 

- Direct subsidies are up-front federal and state cash grants, the partial waiving of state sales taxes, the partial waiving of local property, municipal and school taxes. See URLs.

 

http://www.windtaskforce.org/profiles/blogs/excessive-subsidies-for...

https://www.eia.gov/analysis/requests/subsidy/pdf/subsidy.pdf

 

Any owner, foreign or domestic, of a wind and/or solar project, looking to shelter taxable income from their other US businesses, is allowed to depreciate in 6 years almost the entire cost of a wind and solar project under the IRS scheme called Modified Accelerated Cost Recovery System, MARCS. The normal period for other forms of utility depreciation is about 20 years.

 

Then, with help of Wall Street financial wizardry from financial tax shelter advisers, such as BNEF*, JPMorgan, Lazard, etc., the owner sells the project to a new owner who is allowed to depreciate, according to MARCS, almost his entire cost all over again. Over the past 20 years, there now are many thousands of owners of RE projects who are cashing in on that bonanza.

 

Loss of Federal and State Tax Revenues: The IRS estimated the loss of tax revenues to the federal government for the 5y period of 2017 - 2021. See “Energy” heading in URL

The next report would be for the 2018 - 2022 period

https://www.jct.gov/publications.html?func=select&id=5

 

The indirect largesse, mostly for wind and solar plants^ that produce expensive, variable/intermittent electricity, does not show up in electric rates. It likely is offset by taxes and added to the federal debt.

 

Most of the direct federal subsidies to all energy projects of about $25 billion/y also do not show up in electric rates. They likely were also added to the federal debt.

 

Most of the direct state subsidies to RE projects likely were added to state debts.

 

The additional costs of state-mandated RPS requirements likely were added to the utility rate base for electric rates.

 

* BNEF is Bloomberg New Energy Finance, owned by the pro-RE former Mayor Bloomberg of New York, which provides financial services to the wealthy of the world, including providing them with tax avoidance schemes.

 

^ In New England, wind is near zero for about 30% of the hours of the year, and solar is minimal or zero for about 70% of the hours of the year.

 

https://www.nrel.gov/docs/fy17osti/68227.pdf

https://www.greentechmedia.com/articles/read/tax-equity-investors-b...

 

Warren Buffett Quote: "I will do anything that is basically covered by the law to reduce Berkshire's tax rate," Buffet told an audience in Omaha, Nebraska recently. "For example, on wind energy, we get a tax credit if we build a lot of wind farms. That's the only reason to build them. They don't make sense without the tax credit." 

https://www.usnews.com/opinion/blogs/nancy-pfotenhauer/2014/05/12/e...

 

 

Maine as Third World Country:

CMP Transmission Rate Skyrockets 19.6% Due to Wind Power

 

Click here to read how the Maine ratepayer has been sold down the river by the Angus King cabal.

Maine Center For Public Interest Reporting – Three Part Series: A CRITICAL LOOK AT MAINE’S WIND ACT

******** IF LINKS BELOW DON'T WORK, GOOGLE THEM*********

(excerpts) From Part 1 – On Maine’s Wind Law “Once the committee passed the wind energy bill on to the full House and Senate, lawmakers there didn’t even debate it. They passed it unanimously and with no discussion. House Majority Leader Hannah Pingree, a Democrat from North Haven, says legislators probably didn’t know how many turbines would be constructed in Maine if the law’s goals were met." . – Maine Center for Public Interest Reporting, August 2010 https://www.pinetreewatchdog.org/wind-power-bandwagon-hits-bumps-in-the-road-3/From Part 2 – On Wind and Oil Yet using wind energy doesn’t lower dependence on imported foreign oil. That’s because the majority of imported oil in Maine is used for heating and transportation. And switching our dependence from foreign oil to Maine-produced electricity isn’t likely to happen very soon, says Bartlett. “Right now, people can’t switch to electric cars and heating – if they did, we’d be in trouble.” So was one of the fundamental premises of the task force false, or at least misleading?" https://www.pinetreewatchdog.org/wind-swept-task-force-set-the-rules/From Part 3 – On Wind-Required New Transmission Lines Finally, the building of enormous, high-voltage transmission lines that the regional electricity system operator says are required to move substantial amounts of wind power to markets south of Maine was never even discussed by the task force – an omission that Mills said will come to haunt the state.“If you try to put 2,500 or 3,000 megawatts in northern or eastern Maine – oh, my god, try to build the transmission!” said Mills. “It’s not just the towers, it’s the lines – that’s when I begin to think that the goal is a little farfetched.” https://www.pinetreewatchdog.org/flaws-in-bill-like-skating-with-dull-skates/

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Hannah Pingree on the Maine expedited wind law

Hannah Pingree - Director of Maine's Office of Innovation and the Future

"Once the committee passed the wind energy bill on to the full House and Senate, lawmakers there didn’t even debate it. They passed it unanimously and with no discussion. House Majority Leader Hannah Pingree, a Democrat from North Haven, says legislators probably didn’t know how many turbines would be constructed in Maine."

https://pinetreewatch.org/wind-power-bandwagon-hits-bumps-in-the-road-3/

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